How to Find the Best Mortgage Rate - it Could Save You $3,300 a Year

Our ultimate guide to shopping for a mortgage tells you exactly whom to contact and what to ask before securing a home loan

Mortgage rates have risen to 6.55%, their highest level in a year, pushing up home buyers' borrowing costs at a time when affordability is top of mind. But comparison shopping can pay off for mortgage seekers.

Shopping for a home loan on top of the strenuous process of shopping for the house itself might sound exhausting - but buyers who skip this undertaking often end up considerably overpaying for their mortgage.

In 2025, 87% of home buyers obtained a mortgage loan that was more expensive than what they could have qualified for, according to a new Bankrate study, with the typical borrower paying excess loan costs of more than $3,300 a year.

Real-estate experts say this is largely because some buyers don't know mortgage comparison shopping is even an option, and those who do often feel overwhelmed with the available choices. Because of this, it's common to choose a lender recommended by a real-estate agent, friend or family member out of convenience.

But convenience comes at a significant premium. Working with just one lender, "you will get that line-by-line breakdown of the cost, but you don't necessarily know if it's a good deal or not if you're not looking at multiple quotes," Bankrate data analyst Alex Gailey said. "That quote isn't going to say that this rate or this fee is higher or lower than the national average."

With existing-home prices hitting a new record high in June and mortgage rates reaching their highest level of the year, affordability is top of mind for buyers. One of the most powerful tools they have is comparison shopping to find the best mortgage terms available.

Buyers have several options for acquiring a home loan: banks, credit unions, mortgage brokers or direct lenders. Here's a guide to determine which is best for you and which questions to ask along the way to secure the best rate and lowest overall mortgage costs.

Do this before you start shopping

Before you start shopping around for a mortgage, it is a good idea to check your credit report with all three national credit bureaus particularly for any credit-card accounts, loans or credit inquiries you don't recognize, said Mike Litt, consumer campaign director at the Public Interest Research Group.

"Mistakes on your credit report can negatively impact your credit score, which could mean you'll pay more for a mortgage or might not even be able to get one," Litt said. "If you spot any errors, you'll want to dispute them with the credit bureau and get them corrected first."

Once you know you're in good shape, you can ask for "preapprovals" from different lenders. These allow you to compare estimates of how much you can borrow and what interest rate you might pay.

If your real-estate agent, builder, friend or family member recommends a specific lender to you, consider it a starting point rather than a final answer, said National Association of Mortgage Brokers President Kimber White. Even if you like the recommended lender and the loan estimate looks OK, there's value in checking out the competition.

"Separate convenience from cost," White said. "A one-stop process can be worth something, but it should be a conscious tradeoff, not definite."

Assess your options

Gailey of Bankrate recommends getting at least three quotes from different lenders on the same day so you can make an apples-to-apples comparison. Here's a breakdown of the different types of lenders to shop.

Bank: A loan estimate directly from a bank typically comes with fewer fees, as there's no broker or middleman expecting a cut. Banks - and especially community banks that will go on to actually service the mortgage - can also offer more personalized service. A buyer might feel more comfortable discussing their options with a loan officer at their bank branch who is familiar with the local market and can help navigate options such as Veterans Affairs loans, Federal Housing Administration loans and down-payment assistance programs.

"We service the mortgage loans, so if you have a question or concern after the loan is made, you can give us a call or come into our office," said Jack Hopkins, CEO of CorTrust Bank in Sioux Falls, S.D. "You don't call '1-800-WHO-CARES,' and get transferred four times before you get somebody that can help you."

Credit union: Credit unions are typically the best option for borrowers, because they tend to offer the lowest mortgage rates and fees, said Andrew Pizor, a senior attorney at the National Consumer Law Center. However, loans from credit unions can be harder to qualify for as they might require higher credit-score minimums, bigger cash reserves or stricter debt-to-income limits.

You also have to qualify for membership in the credit union itself, which can be determined by where you live or work. And, because the not-for-profit entities don't have as large a client base as major banks, it can be more difficult to access in-person branch services or digital services.

Mortgage broker: Mortgage brokers choose a rate sheet, or the document that lists the price and fees for the loan, that provides the best fit for the borrower's profile from a roster of wholesale lenders. "That is the comparison-shopping process consumers are told to do on their own, already built into how brokers operate," White said.

But consumer advocates warn that brokers are often paid based on the size of the loan and "have no obligation to get a good or affordable loan for the borrower," according to Pizor, who said borrowers usually end up paying more when they go through a broker. However, if you haggle for a lower rate, he said, a broker will often try to get one for you.

Lindsay Frangie, a Georgia-based branch partner at the lending firm Alcova Mortgage and a former mortgage broker herself, said it's important to ask a broker how many lenders they compared. "There are companies that incentivize brokers to send [them] deals, even when they're not the best price," she said.

Direct lender: Direct lenders fund mortgages with their own money, but they generally fall into two categories: massive national online brands and local correspondent lenders.

Large online lenders offer speed and digital convenience, but they can lack personalized guidance. "Although you might be saving time ... it's harder to then ask immediate follow-up questions when you are just looking at an online page," Gailey said.

Local correspondent lenders offer a middle ground between a broker's wide selection and a bank's in-house processing. While retail operations at the likes of Chase $(JPM)$ or Freedom Mortgage offer only their own proprietary rates, correspondent lenders can shop multiple options while keeping underwriting in-house.

"We have 40 investors as a correspondent lender, which gives us the ability to shop 40 different rate sheets," Frangie said. "But we also underwrite and fund our own loans before transferring them for servicing. A big retail bank only has one rate sheet on the inside."

Ask these 7 questions before agreeing to the loan terms

-- What is the loan's APR? Two loans can have the same interest rate and different annual percentage rates, or APRs. The APR calculates the cost of upfront fees into the interest rate, so it's a better indicator of how much you'll pay in total costs over the loan's term.

-- Is that the best rate you can give me? Or, "[Anther lender] offered me a better rate - can you beat it?" The worst they can say is no.

-- Do you have any down-payment assistance options? These programs typically apply to first-time buyers who meet certain income guidelines depending on the state or locality offering the assistance.

-- How much are the lender fees, and what's included in them? Gailey recommends going through each line item with the lender to understand what each fee covers and whether there is any wiggle room.

-- Are there lender credits or discount points in this quote, and what do they cost or save me? Discount points lower your interest rate in exchange for paying more cash at closing, while lender credits lower upfront closing costs in exchange for a higher interest rate and larger monthly payment.

-- How long is this loan estimate good for? This lets you know how long you have to review the terms and make a decision.

-- What happens to my mortgage after closing? While some lenders who originate the loan will also service it, many will sell the mortgage to free up capital. This won't impact the terms of your loan; it just means you'll send payments to a different servicer. Still, you want to know, "who am I going to be potentially married to for the next 30 years?" Hopkins said.

'There's real power in shopping around'

Make sure you're comparing the full financial benefit rather than just the interest rate. This is particularly important for new-construction homes, as big builders often have preferred lenders that offer major incentives.

"That builder lender might have a quarter-point higher rate, but if you don't go with that lender you are going to miss out on $25,000 in incentives," Frangie said.

Don't miss: What affordability crisis? Rich home buyers are powering the housing market.

Some buyers are hesitant to shop around because they're worried about multiple "hard" credit pulls impacting their credit ratings. But all preapprovals and loan estimates within a 45-day window are recorded on your credit report as a single inquiry, according to the Consumer Financial Protection Bureau.

"Home prices are high, [and] mortgage rates are elevated.?This is the one lever that buyers still have to try to lower their mortgage costs and their housing costs overall. And it's unfortunately a lever that is not being utilized enough," Gailey said. "There's real power in shopping around."

MW How to find the best mortgage rate - it could save you $3,300 a year

By Genna Contino

Our ultimate guide to shopping for a mortgage tells you exactly whom to contact and what to ask before securing a home loan

Mortgage rates have risen to 6.55%, their highest level in a year, pushing up home buyers' borrowing costs at a time when affordability is top of mind. But comparison shopping can pay off for mortgage seekers.

Shopping for a home loan on top of the strenuous process of shopping for the house itself might sound exhausting - but buyers who skip this undertaking often end up considerably overpaying for their mortgage.

In 2025, 87% of home buyers obtained a mortgage loan that was more expensive than what they could have qualified for, according to a new Bankrate study, with the typical borrower paying excess loan costs of more than $3,300 a year.

Real-estate experts say this is largely because some buyers don't know mortgage comparison shopping is even an option, and those who do often feel overwhelmed with the available choices. Because of this, it's common to choose a lender recommended by a real-estate agent, friend or family member out of convenience.

But convenience comes at a significant premium. Working with just one lender, "you will get that line-by-line breakdown of the cost, but you don't necessarily know if it's a good deal or not if you're not looking at multiple quotes," Bankrate data analyst Alex Gailey said. "That quote isn't going to say that this rate or this fee is higher or lower than the national average."

With existing-home prices hitting a new record high in June and mortgage rates reaching their highest level of the year, affordability is top of mind for buyers. One of the most powerful tools they have is comparison shopping to find the best mortgage terms available.

Buyers have several options for acquiring a home loan: banks, credit unions, mortgage brokers or direct lenders. Here's a guide to determine which is best for you and which questions to ask along the way to secure the best rate and lowest overall mortgage costs.

Do this before you start shopping

Before you start shopping around for a mortgage, it is a good idea to check your credit report with all three national credit bureaus particularly for any credit-card accounts, loans or credit inquiries you don't recognize, said Mike Litt, consumer campaign director at the Public Interest Research Group.

"Mistakes on your credit report can negatively impact your credit score, which could mean you'll pay more for a mortgage or might not even be able to get one," Litt said. "If you spot any errors, you'll want to dispute them with the credit bureau and get them corrected first."

Once you know you're in good shape, you can ask for "preapprovals" from different lenders. These allow you to compare estimates of how much you can borrow and what interest rate you might pay.

If your real-estate agent, builder, friend or family member recommends a specific lender to you, consider it a starting point rather than a final answer, said National Association of Mortgage Brokers President Kimber White. Even if you like the recommended lender and the loan estimate looks OK, there's value in checking out the competition.

"Separate convenience from cost," White said. "A one-stop process can be worth something, but it should be a conscious tradeoff, not definite."

Assess your options

Gailey of Bankrate recommends getting at least three quotes from different lenders on the same day so you can make an apples-to-apples comparison. Here's a breakdown of the different types of lenders to shop.

Bank: A loan estimate directly from a bank typically comes with fewer fees, as there's no broker or middleman expecting a cut. Banks - and especially community banks that will go on to actually service the mortgage - can also offer more personalized service. A buyer might feel more comfortable discussing their options with a loan officer at their bank branch who is familiar with the local market and can help navigate options such as Veterans Affairs loans, Federal Housing Administration loans and down-payment assistance programs.

"We service the mortgage loans, so if you have a question or concern after the loan is made, you can give us a call or come into our office," said Jack Hopkins, CEO of CorTrust Bank in Sioux Falls, S.D. "You don't call '1-800-WHO-CARES,' and get transferred four times before you get somebody that can help you."

Credit union: Credit unions are typically the best option for borrowers, because they tend to offer the lowest mortgage rates and fees, said Andrew Pizor, a senior attorney at the National Consumer Law Center. However, loans from credit unions can be harder to qualify for as they might require higher credit-score minimums, bigger cash reserves or stricter debt-to-income limits.

You also have to qualify for membership in the credit union itself, which can be determined by where you live or work. And, because the not-for-profit entities don't have as large a client base as major banks, it can be more difficult to access in-person branch services or digital services.

Mortgage broker: Mortgage brokers choose a rate sheet, or the document that lists the price and fees for the loan, that provides the best fit for the borrower's profile from a roster of wholesale lenders. "That is the comparison-shopping process consumers are told to do on their own, already built into how brokers operate," White said.

But consumer advocates warn that brokers are often paid based on the size of the loan and "have no obligation to get a good or affordable loan for the borrower," according to Pizor, who said borrowers usually end up paying more when they go through a broker. However, if you haggle for a lower rate, he said, a broker will often try to get one for you.

Lindsay Frangie, a Georgia-based branch partner at the lending firm Alcova Mortgage and a former mortgage broker herself, said it's important to ask a broker how many lenders they compared. "There are companies that incentivize brokers to send [them] deals, even when they're not the best price," she said.

Direct lender: Direct lenders fund mortgages with their own money, but they generally fall into two categories: massive national online brands and local correspondent lenders.

Large online lenders offer speed and digital convenience, but they can lack personalized guidance. "Although you might be saving time ... it's harder to then ask immediate follow-up questions when you are just looking at an online page," Gailey said.

Local correspondent lenders offer a middle ground between a broker's wide selection and a bank's in-house processing. While retail operations at the likes of Chase (JPM) or Freedom Mortgage offer only their own proprietary rates, correspondent lenders can shop multiple options while keeping underwriting in-house.

"We have 40 investors as a correspondent lender, which gives us the ability to shop 40 different rate sheets," Frangie said. "But we also underwrite and fund our own loans before transferring them for servicing. A big retail bank only has one rate sheet on the inside."

Ask these 7 questions before agreeing to the loan terms

-- What is the loan's APR? Two loans can have the same interest rate and different annual percentage rates, or APRs. The APR calculates the cost of upfront fees into the interest rate, so it's a better indicator of how much you'll pay in total costs over the loan's term.

-- Is that the best rate you can give me? Or, "[Anther lender] offered me a better rate - can you beat it?" The worst they can say is no.

-- Do you have any down-payment assistance options? These programs typically apply to first-time buyers who meet certain income guidelines depending on the state or locality offering the assistance.

-- How much are the lender fees, and what's included in them? Gailey recommends going through each line item with the lender to understand what each fee covers and whether there is any wiggle room.

-- Are there lender credits or discount points in this quote, and what do they cost or save me? Discount points lower your interest rate in exchange for paying more cash at closing, while lender credits lower upfront closing costs in exchange for a higher interest rate and larger monthly payment.

-- How long is this loan estimate good for? This lets you know how long you have to review the terms and make a decision.

-- What happens to my mortgage after closing? While some lenders who originate the loan will also service it, many will sell the mortgage to free up capital. This won't impact the terms of your loan; it just means you'll send payments to a different servicer. Still, you want to know, "who am I going to be potentially married to for the next 30 years?" Hopkins said.

'There's real power in shopping around'

Make sure you're comparing the full financial benefit rather than just the interest rate. This is particularly important for new-construction homes, as big builders often have preferred lenders that offer major incentives.

"That builder lender might have a quarter-point higher rate, but if you don't go with that lender you are going to miss out on $25,000 in incentives," Frangie said.

Don't miss: What affordability crisis? Rich home buyers are powering the housing market.

Some buyers are hesitant to shop around because they're worried about multiple "hard" credit pulls impacting their credit ratings. But all preapprovals and loan estimates within a 45-day window are recorded on your credit report as a single inquiry, according to the Consumer Financial Protection Bureau.

"Home prices are high, [and] mortgage rates are elevated.?This is the one lever that buyers still have to try to lower their mortgage costs and their housing costs overall. And it's unfortunately a lever that is not being utilized enough," Gailey said. "There's real power in shopping around."

(MORE TO FOLLOW) Dow Jones Newswires

July 17, 2026 14:19 ET (18:19 GMT)

MW How to find the best mortgage rate - it could -2-

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